What does tax deduction mean and what are the deductible expenses with the 730/2021 model

We immediately distinguish the deductible expenses and charges from the deductible ones. Deductible expenses are those that reduce the overall income on which to calculate the tax due. This is the case, for example, of compulsory and voluntary social security and welfare contributions or donations to non-profit organizations.

But let’s go further and see what tax deduction means and what are the deductible expenses with the 730/2021 model. We will present the news in this regard and illustrate the complete list.

Regarding the deductible expenses with the 730/2021 model

The deductible expenses will be used to reduce the tax to be paid, to varying degrees, depending on the nature and type of expense. Healthcare costs, for example, result in a tax deduction of 19%. Other expenses account for a percentage of 26%, 30%, 35% or 50%.

In the context of form 730, part E is the one reserved for the taxpayer for the acceptance of these items. In fact, it indicates the expenses incurred and which generate a tax deduction or a deduction from income.

The deductibility at 19%: let’s proceed to understand what the tax deduction means and what are the deductible expenses with the 730/2021 model

With regard to the list of deductible expenses at 19%, we find the health expenses for their own, for dependent family members and for disabled people. But also those related to the purchase of vehicles and guide dogs intended for them, and health costs previously paid in installments. All these items are foreseen from line E1 to line E6.

Going further, that is, from line E8 to line E10, the remaining 19% deduction costs find space.

In particular, codes 8, 9, 10 and 11 concern the chapter of interests. There are in fact those relating to mortgage loans for the purchase of other properties (8), those for building recovery (9). But also those for the construction of the main house (10) and those for agricultural loans or mortgages (11).

Proceeding we find the expenses for education, funeral expenses, expenses for personal assistance staff. Again, those for sports activities for children, for real estate brokerage, for rents incurred by off-site students.

From code 20 to code 28 we encounter all the items related to donations. Namely: those in favor of the populations hit by disasters; those pro associations and amateur sports clubs or those for the benefit of mutual aid societies. Similarly, those in support of cultural and artistic activities are welcomed.

Moving on, to code 29 we have veterinary expenses, to 30 those for expenses related to interpreting services by deaf people, to 31 the disbursements to schools.

Then we meet the costs of redemption for the graduation years (32) and those for nursery school (33). And then the expenses for life insurance and accidents at work (34), for the subscription to the public transport service (40). Finally, the expenses for minors and adults with SLD (44).

Traceability and proof of payment for 19% deductible expenses

From tax year 2020, payment traceability is required for these expenses. Except in the case of the purchase of medical devices or medicines or for health services provided by public structures or affiliated with the NHS.

In all other cases, traceability will be attested by proof of payment through pre-established channels. That is, through a copy of the payment with pagoPA or MAV, with postal order or with bank statement or ATM receipt. But also with annotation on the invoice, tax receipt or commercial document of the person who received these sums.

Expenses for which the deduction of 26%, 30%, 35% and 90% is due

We are trying to understand what tax deduction means and what are the deductible expenses with the 730/2021 model.

At this point we present what are the expenses for which the 26% deduction is due. First of all we find the liberal donations in favor of NGOs and political parties they generate (lines E8 to E10).

Instead, a deduction of 30% and 35% is due in the case of donations in cash or in kind to ONLUS and APS or to a voluntary organization (OV).

The same applies to donations to the State, the Regions, local territorial bodies, public bodies or institutions, legally recognized non-profit foundations and associations.

The disbursements to civilly recognized religious bodies for COVID-19 also fall into this category.

Let’s go even further and see on which expenses the 90% deduction is due.

This is the case with premiums paid to an insurance company for a disaster risk contract. However, when, at the same time, the tax credit relating to the 110% earthquake bonus interventions is transferred to the same company.

News from tax year 2020, for some expenses in this section

For the expenses of this section there is a change valid from the 2020 tax year. The related deduction is in full, up to an amount of the declarant’s total income equal to 120,000 euros. As income increases, the deduction decreases, up to zero with an income of 240,000 euros.

This is the case of education expenses, funeral or personal assistance expenses, veterinary or sports expenses. Ditto for those of insurance, for subscriptions for public transport service, etc.

Here is therefore partly outlined what tax deduction means and what are the deductible expenses with the 730/2021 model.

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